Geek notes: Senator Ron Wyden’s Internet Radio Fairness Act

With much fanfare and support, Senator Ron Wyden (D-OR) introduced his Internet Radio Fairness Act (S.3609) to the Senate Judiciary Committee in late September. The point of the proposed law is to give services like Pandora some performance royalty relief, by applying to them the same royalty paying standards applied to cable and satellite providers. On the other side of Capitol Hill, Representative Jason Chaffetz (R-UT) has introduced a similar bill, which also has strong backing from Pandora.

The IRFA would “remove the regulatory shackles preventing internet radio from being commercially viable,” Wyden declares. Govtrack.us gives this legislation a three percent chance of being enacted. A lot of that has to do with the dismal chances anything has of getting through Congress these days.

1. The heart of the legislation begins by amending Section 112(e) of the United States code, which governs “ephemeral recordings”—the statutory place that streamers like Pandora found themselves in the earliest years of this century. Is it this language that consigned Internet radio operations to the tender mercies of the Copyright Royalty Board, without, critics charge, any clear guidance on how to assess the fair and sustainable market value of such services.

Section 112(e) currently says that “The Copyright Royalty Judges shall establish rates that most clearly represent the fees that would have been negotiated in the marketplace between a willing buyer and a willing seller.” This is followed by some vague language about assessing the capital costs and economic risks the transmitter is taking.

To the rescue, Wyden’s bill plops a replacement paragraph into the law:

“In any proceeding under this paragraph, the burden of proof shall be on the copyright owners of sound recordings to establish that the fees and terms that they seek satisfy the requirements of this paragraph, and do not exceed the fees to which most copyright owners and users would agree under competitive market circumstances. To the extent the Copyright Royalty Judges consider marketplace benchmarks to be relevant, they shall limit those benchmarks to benchmarks reflecting the rates and terms that have been agreed under competitive market circumstances by most copyright users.'”

Presumably that last sentence tethers the Copyright Board’s rate making decisions to cable, satellite, and similar streamers, who, Wyden notes, pay far less of a percentage of their revenue to performance rights holders than do Internet radio companies (around five times less).

The larger objective, his legislation stipulates, is to honor section 801(b)(1) of the Copyright Act, which instructs the Board “to minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.” So onerous have past Copyright Board royalty judgments been on Pandora that Congress has had to step in to revise its rulings. S.3609 is designed to end that sort of trouble.

“Such terms and rates shall distinguish among the different types of digital audio transmission services then in operation and may take into account the different characteristics of such services, and may include a minimum annual fee of not more than $500 for each provider of services that is subject to such rates and terms, which may be the only minimum fee for such provider and may be assessed only once annually to that provider. Any copyright owners of sound recordings or any entities performing sound recordings affected by this paragraph may submit to the Copyright Royalty Judges for consideration in such rate-setting proceedings licenses covering such noninteractive sound recording performances.”

$500 a year for the little guys. That appears to be the idea.

3. The bill also increases the visibility of Copyright Royalty Board judge appointments by making them Presidential appointments (with advice and consent from the Senate). And the law allows the Board lots of wiggle room to give webcasters the benefit of the doubt. To wit, the Board:

“shall establish license fee structures that foster competition among the licensors of sound recording performances and between sound recording performances and other programming, including per-use or per-program fees, or percentage of revenue or other fees that include carve-outs on a pro-rata basis for sound recordings the performance of which have been licensed either directly with the copyright owner or at the source, or for which a license is not necessary;

(iii) shall give full consideration for the value of any promotional benefit or other non-monetary benefit conferred on the copyright owner by the performance;

(iv) shall give full consideration to the contributions made by the digital audio transmission service to the content and value of its programming;”

That’s just some of the proposed bill, now awaiting consideration in the Senate Judiciary Committee. Wyden’s law is a pretty complicated piece of code, but it would move streaming radio forward. Whether S.3609 can make its way through the Paralysis Machine that is Capitol Hill is anybody’s guess.

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About Matthew Lasar

Matthew Lasar is a co-founder of Radio Survivor and its business manager. He is the author of Radio 2.0: Uploading the First Broadcast Medium (http://tinyurl.com/jr8uknk) and teaches history at the University of California at Santa Cruz. Likes: deejays, classical music, Disco, postpunk, cats, free school lunches. Dislikes: money, ideologies, claims that technology will fix everything. Follow him on twitter at @matthewlasar.

I find this new law offensive. Honestly, they want $500 from us small broadcasters for what? Administrative overhead? Why even collect it at all. Really, the data they would collect from any small broadcaster would be so statistically insignificant, and not one penny (or 1000th of a penny) would ever go to an artist anyways.

Honestly, who is going to look at my logs and say.. hrm.. this guy over here played this band.. we should do something with it. Nobody.. there is not one piece of actionable data that anyone could gleam from a small broadcaster. Sure, there are 52,000 shoutcast streams world wide out there and the top 100 US stations all have a couple hundred listeners but once you get out of the top 200, the rest are little bitty streams each with maybe 5 or 6 listeners.. some actually go up to 30.. So, you want to go after those little guys and demand $500 USD a year? For cripes sake, most of these are streams that are in games, like second life, etc. There should be a cut off. They don’t sell ads, they don’t do commercials. It’s like trying to tell someone who’s having a garage party that they need to pay royalties for publicly broadcasting this music… public because the neighbors could hear it.